Filed by COR Therapeutics, Inc. pursuant to Rule 425
under the Securities Act of 1933 and deemed
filed pursuant to Rule 14a-12 of
the Securities Exchange Act of 1934.
Subject Company: COR Therapeutics, Inc.
Commission File No.: 000-19290
MILLENNIUM PHARMACEUTICALS
Res. #20069850
Moderator: Mark Levin
December 6, 2001 / 7:00 a.m. MT
Page 1
MILLENNIUM PHARMACEUTICALS
Moderator: Mark Levin
December 6, 2001
7:00 a.m. MT
Operator: Ladies and gentlemen, thank you for holding. Welcome to the
Millennium COR conference call discussing the merger. At this
time, all participants will be in a listen-only mode. There
will be a question-and-answer session to follow. Please be
advised that this call is being taped. At this time I would
now like to introduce your host for today's call, Gina
Brazier, director of investor relations at Millennium
Pharmaceuticals. Please go ahead.
Gina Brazier: Good morning and welcome to the Millennium/COR conference call
discussing our merger announced this morning. I'm Gina
Brazier, director of investor relations at Millennium. With me
today from Millennium are Mark Levin, chief executive officer;
Kevin Starr, executive vice president, business operations and
chief financial officer; John Maraganore, senior vice
president, strategic product development; and Claire Midgley,
vice president of corporate communications. From COR are
Vaughn Kailiean, chief executive officer of COR, and Dr.
Charles Homcy, executive vice president of research and
development.
The agenda for the call is as follows: Mark Levin and Vaughn
Kailiean will discuss the merger and their view of the future
of the company. Vaughn will also provide updated financial
guidance for COR, and Kevin will review the terms of the
transaction. We will then take your questions.
Before I turn the call over to Mark, I'd like to state that
during this call we will be making forward-looking statements,
including statements regarding the proposed transaction
between Millennium and COR, the expected timetable for
completing this transaction, future financial and operating
results, benefits and synergies of the transaction, future
opportunities for the combined companies, discovery, and
development of products, potential acquisitions, strategic
alliances, and intellectual property, and any other statements
about Millennium or COR management's future expectations,
beliefs, goals, plans, or prospects constitute forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Any statements that are not
statements of historical fact include statements containing
the words "believe," "plan," "anticipate," "expects,"
"estimates," and similar expressions should also be considered
to be forward-looking statements. There are a number of
important factors that could cause actual results or events to
differ materially from those indicated by such forward-looking
statements including the inability to consummate the
transaction; the inability of Millennium to successfully
integrate COR's operations and employees; the inability to
realize anticipated synergies and cost savings; adverse
results in drug discovery and clinical development processes;
failure to obtain patent protection for discoveries;
commercial limitations opposed by patents owned or controlled
by third parties; dependence upon future alliance partners to
develop and commercialize products and services based on our
work; difficulties or delays in obtaining regulatory approval
to market products and services resulting from the company's
combined development effort; the requirements of substantial
funding to conduct research and development and to expand
commercialization activities and the other factors described
under the heading "Risk Factors That May Affect Results" in
Millennium's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001, and under the heading "Risk Factors"
in
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COR's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001, which descriptions are incorporated by
reference into this press release. Millennium and COR disclaim
any intention or obligation to update any forward looking
statements as a result of developments occurring after the
date of this call.
Mark?
Mark Levin: Thanks, Gina. As you can imagine, we are tremendously
enthusiastic about our announcement this morning regarding the
merger between Millennium and COR. The merger is a key
milestone in Millennium's vision to build a major
biopharmaceutical company, a company transcending the limits
of medicine to the development of breakthrough products.
Products based on the cause and pathways of human diseases to
make a significant difference in people's lives. Very
importantly, this vision is shared by Millennium and COR. Let
me now move on to reviewing the highlights of this
transaction.
First, this merger is the most important biopharmaceutical
merger in the history of the industry. We are bringing
together two of the most successful companies in the industry
to realize our plan of developing the first and only truly
gene-to-patient enterprise. The numbers alone tell a
compelling story. The joint company will have 1,200 people in
R&D, 140 people in marketing and sales, and planned annual R&D
budget of over $500 million in 2002.
With our new commercial platform and cardiovascular franchise,
we will move even more aggressively to bring our later-stage
compound to the clinic and on to the marketplace. These
compounds include exciting opportunities in cardiovascular
disease, oncology, inflammation, and metabolic disease. This
also adds to our ability to license in later-stage molecules
from the outside into our marketing, development, and sales
operation.
Secondly, the combined Millennium/COR merger will have four
franchise disease areas: cardiovascular, oncology,
inflammation, and metabolic disease. Again, the numbers tell
and exciting story. Our four franchises have combined sales in
the U.S. alone of over $30 billion in opportunity. The
combined company year-end 2001 will have three products on the
market, one product marketed by the company, nine molecules in
the clinic, one I&D filed with trials to start in the near
term, and positioned to put three to four new molecular
entities into the clinic in 2002. Equally important to our
development pipeline will be the combined depth of our
discovery pipeline -- dozens of molecules and pre-clinical and
lead optimization with hundreds of targets to inter-screen
[sp] over the next several years in both small molecule and
antibody therapeutics. In short, we have the pipeline to make
it happen.
Third, the products in this pipeline represent two
breakthroughs in the treatment of disease: Integrilin -- it's
the leading intravenous platelet aggregation inhibitor with
over $225 million in 2001 sales and growing at over 30 percent
a year. Although this product has taken a pause this quarter,
I am confident that the molecule will continue to take patient
share and grow 30 percent annually over the next several
years. Campath -- an important antibody that we developed with
and recently licensed to our partners on the market for the
treatment of refractory chronic lymphocytic leukemia.
Melastatin -- a proof-of-principal personalized medicine
diagnostic product to predict the likelihood of metastasis for
melanoma, also licensed to our partner. LDP341 -- as many of
you know, 341 is our premier oncology compound based on
proteosome inhibition, a novel mechanism for treating cancer.
We are the only company in the clinic with a compound
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based on this novel and promising mechanism, and we are in
trial for both liquid and solid tumors. 341 has shown very
striking early results in multiple myeloma and various solid
tumors, some of which we will be discussing at next week's ASH
[sp] meeting. J591 -- this is an antibody to prostate-specific
membrane antigen widely regarded as the best and most specific
target for prostate cancer therapy. We have seen significant
reduction in PSA levels and tumor shrinkage in early studies.
In addition, we have important molecules in the clinic and a
variety of other important disease areas including asthma,
ulceritic colitis, Crohn's disease, stroke, and, of course,
MLN4760, our new obesity compound from our genomics-driven
platform which just entered the clinic.
The COR pipeline includes a number of cutting-edge compounds
that match well with this portfolio of novel products. COR's
receptor tyrosine [sp] kynase [sp] program will have its first
product in the clinic very early next year, and the pipeline
also includes emerging new products such as olefactor 10A
inhibitor, which has the potential to treat the many patients
with deep vein thrombosis and arterial fibrillation who are
under-served by current therapies.
The implications of this deep pipeline are even more exciting.
Next year we will have additional compounds entering the
clinic in oncology, inflammation, and obesity.
Fourthly, COR brings to Millennium a seasoned and extremely
well-regarded team. Without unduly embarrassing Vaughn and
Charles here on the call with me today, let me just say that
we are not alone in recognizing that this team is one of the
finest that the biotechnology industry has ever produced. We
are truly proud that they have seen fit to join forces with
us, and I'm sure all of you in the financial community will
agree with me on this one.
Both Vaughn and Charles will have continuing prominent roles,
senior roles, in the company today. Vaughn will join
Millennium's board as vice chairperson and in addition will
become responsible for commercial operations in the
therapeutic area businesses. Charles will become president of
R&D and lead our 1,200-person-strong effort in research and
development. Both Vaughn and Charles will report to me, along
with Kevin Starr. I'm also delighted today to announce that
Kevin has been promoted to chief operating officer effective
immediately, based on his outstanding performance.
Following completion of the merger, we expect to add four new
COR board members to the Millennium board of director,
including Vaughn Kailiean, current CEO of COR; Sean Coughlin
[sp], a COR co-founder and professor of medicine at the
University of California-San Francisco; Ernest Morio [sp], a
COR director whose distinguished career has included, among
other accomplishments, CEO positions at Alza [sp] and Glaxxo;
and Ginger Graham, group chairman at Gidon [sp]. In addition
to the board and senior management team, COR adds to
Millennium's commercial infrastructure a seasoned development
and commercialization team with a track record of excellence.
The COR 109-person sales force has had widely recognized
success in marketing Integrilin. In the face of stiff
competition from the marketing powerhouses at Lilly and Merck,
the COR sales team built an over 50 percent market share in
its class.
COR also brings the clinical trial organization to Millennium
with proven track record capabilities of launching and
managing large-scale, multi-center studies from Phase I to
Phase IV. This group, in combination with Millennium's
existing clinical organization,
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December 6, 2001 / 7:00 a.m. MT
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will provide the resources to effectively manage our growing
clinical pipeline from all four franchise areas.
As I reflect on the strength, passion, and commitment of the
combined leadership, science and business, I tell you with
great confidence that this is an incredible team, unmatched in
the industry. A team that can build the next major
biopharmaceutical company.
And finally, our vision to realize the promise of the genome
by developing products based on molecular medicine and
personalized medicine continues to evolve with the merger. At
Millennium, the novel technologies of the life sciences are
coming together. Our expertise in genomics with our ability to
identify and validate new targets with our elucidation of the
synergies among these genes, targets, and biological pathways,
will give us the ability to develop truly molecular medicines
to treat disease.
It is clear, for example, that our crucial relationships in
the pathway relating to the causes of both cardiovascular and
metabolic disease as well as the relationships of both
oncology and cardiovascular disease to inflammation. We firmly
believe that as an understanding of these targets and pathways
and the related markers in their association with disease that
fuels Millennium's leadership in personalized medicine -- the
right gene, the right target, the right pathways, to attack
the right disease for the right person.
To wrap up, we at Millennium have a commitment to build the
leading biopharmaceutical company where strategic mergers have
always been a very important aspect of this strategy. The COR
merger will bring together two quality organizations with
synergistic capabilities across all aspects of both companies.
It brings Millennium into the arena of sales and marketing
with Integrilin, the number-one product in its class.
Both teams share a strong science-based culture and a
tremendous passion for our vision. We are very much looking
forward to combining forces as we accelerate our progress to
building the next major new biopharmaceutical player.
I will now turn the call over to our new colleague, Vaughn
Kailiean.
Vaughn Kailiean: Thank you, Mark, and it's an absolute delight to be here today
with Mark to announce this merger. Those of you who have been
following COR for a long time know our passion for excellence,
know our absolute insistence on having the right and the very
best people, and from the very first time that we sat and
talked with Mark and Mark's organization, we recognize their
excellence, but I think one of the hallmarks of this coming
together is that every time we met, it got better. There were
not rough spots-- there were obviously rough spots in any
negotiation but, you know, at the end of every discussion, we
felt better about the deal than we did coming in, and we're
hitting the market here absolutely with a great rush,
recognizing that Mark has built a great team and Charlie and I
and the COR organization are very, very envious of the
tremendous organization that you've built, and we're just
delighted to be able to make a significant contribution to it.
I wanted to give you a few -- I want to spend a few minutes
now giving you our perspective on this merger. First of all,
as you know, we at COR are very, very proud to have built our
business basically from scratch as a research start-up in 1988
to a fully integrated commercial organization with an R&D and
science-driven pipeline of novel therapeutic products,
including one on the market only 12 years later. We view this
merger with Millennium as an entirely natural next step in
COR's evolution. Our pipeline requires us to gain access to
just the resources Millennium has available in its franchise
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areas, and we believe that our joint and expanded
infrastructure will optimize the development and marketing of
our pipeline.
Together, we'll have the critical mass of novel products and
the development and commercial organization to develop them
and bring them to the market with true force. As you can tell
from the development of our oncology program at COR, we have
long been committed to the strategy of developing a pipeline
of products against a number of molecular targets. The
combination of cardiovascular disease and oncology alone are
the two major diseases in the developed world, and the
combination of Millennium's and COR's efforts in these two
areas will make us a major player in therapeutic development
and commercialization.
In addition, as Mark has so kindly pointed out, our sales
force has competed successfully, very successfully, in an
extremely competitive environment, and we believe its value
will be leveraged across all of the franchise areas at COR.
This is a true area of synergy for the two companies.
Finally, let me just say a few words about Integrilin. As you
saw from this morning's press release, our sales expectations
for Integrilin for 2001 have been revised, but with a strong
caveat that we continue to see a long-term positive outlook in
growth. We're adjusting our 2001 annual worldwide sales
forecast to 225 to 230 million, which will result in earnings
per share of break-even to modest profitability in the fourth
quarter and, as a result, modest profitability for the year
ending 2001.
This adjustment is due to a slowdown in the market growth,
which has been obvious to all of us, and we've been discussing
during the second half of 2001 as compared to the first half,
but we expect this slowdown to be transient.
In spite of this, Integrilin patient market share grew to over
51 percent in the second half of 2001, and this growth in
itself may be understated due to a recent finding that some
intervential [sp] cardiologists who are switching from Riopro
[sp] to Integrilin may have been limiting their duration of
therapy to only 12 hours post-PCI as opposed to the
recommended 18 to 24 hours.
As I said earlier, however, the bottom line is that we fully
believe and we're fully committed to the long-term growth of
Integrilin, and we're putting in place specific initiatives to
spur Integrilin growth, and these include a major conversion
effort with hospital administrators, which demonstrates a
favorable cost and pharmacoeconomic profile of Integrilin
relative to competitors building off the pharmacoeconomic data
that was presented at the recent American Heart Association
meeting.
A new emphasis on new findings from Integrilin that
demonstrate more favorable benefits with Integrilin when it's
dosed for at least 18 hours post-PCI. That was also presented
at the recent American Heart Association meeting, and we've
got a focus on establishing a broad-scale, early-use in an
early aggressive therapy of Integrilin and unstable angina by
promoting adherence to the new ACCA-AHA management guidelines
in a quality improvement initiative called Crusade in over 600
hospitals in which we will enroll over 60,000 patients.
And finally, to further grow the marketplace here, we are
going to pursue Phase II, III, and IV clinical trials of
Integrilin in ST segment elevation MI, CAM [sp] surgery, and
peripheral arterial disease.
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December 6, 2001 / 7:00 a.m. MT
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To sum up, just let me say that Charles and I and the rest of
the COR team are very, very much looking forward to helping
build Millennium into a major, the major, new
biopharmaceutical player.
With that, it's now Kevin's turn, and Kevin is out in
California, so Kevin, I'll let Kevin give the terms of the
transaction. Kevin?
Kevin Starr: Thanks, Vaughn. Good morning, everybody. First, let me just
walk through the terms of the transaction. Some of this is in
the press release. I'd like to just go through it
comprehensively.
So, as you know, Millennium Pharmaceuticals will be acquiring
COR in a stock-for-stock exchange that's valued at
approximately $2 billion, in which COR shareholders will
receive 0.9873 shares of newly issued Millennium stock for
each share of COR stock. Based on last night's closing price,
this would result in an applied purchase price of $35 per
share for COR stock. This is a 77 percent premium to
yesterday's close, and a 64 percent premium to the trailing
30-day average. The combined company will keep the Millennium
Pharmaceutical's name and will be headquartered in Cambridge,
Mass. As a result of the transaction, we expect to issue 58
million shares of Millennium stock. The merger agreement has
been approved by both boards at Millennium and COR, and the
transaction is subject to shareholder vote at both companies,
as well as HSR clearance. We do expect the transaction to
close in the first quarter of 2002.
Also, as you know, COR currently has approximately $600
million in outstanding convertible debentures, so under the
terms of the merger, Millennium is required to put forward a
tender offer for those converts that are in the money after
closing. It is our intent to retire as much of that
convertible debt as possible, as soon after the close as
possible.
As far as guidance goes, because we did not expect the
transaction to close before the end of the year, this merger
does not affect Millennium's 2001 financials and our 2001
guidance does remain unchanged. As a reminder, we expect
revenue for 2001 to be approximately $240 million, with a net
operating loss of approximately $125 million. For 2002, we can
only say now that we expect Integrilin, as Vaughn mentioned --
Integrilin sales to be a large growth story, with growth to be
at least 30 percent, and we expect Millennium revenues to grow
as well over the next several years.
Our management teams will use the next few weeks to determine
the financial profile of the combined company and we'll be
providing that full guidance on 2002 and beyond for Millennium
and COR as well as the combined entity, as part of our press
release in our 2001 quarterly financial call, or annual
financial call, during the week of January 21st.
We do expect that this merger will be an important step in
driving us towards our goal of profitability in 2003, or 2004,
but importantly, this will not be the only step, as you will
see us continue to in-license and acquire promising products
and companies and promote organic growth from our pipeline as
we move forward in building the company.
Before I turn the call back over to Mark, I'd like to spend a
minute giving some of my perspective on COR and our decision
to merge. As you know, strategic mergers and acquisition
activity has always been a key part of our strategy to create
a major new biopharmaceutical player that we've been planning.
In order to execute on this M&A strategy, we've assembled one
of the finest teams in the industry that has reviewed
literally thousands of potential opportunities. In each one of
these cases, we've set an
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extremely high bar in terms of the quality of science, the
magnitude of the opportunity, the strategic fit within our own
therapeutic area, and of course, the people. And the COR
acquisition rose to the top, meeting every one of our
stringent criteria. The Millennium team, moreover, has the
industry's strongest track record at integrating or
transforming acquisitions. We can point very proudly to
acquisitions and mergers with Chemgenics [sp], Lucasite [sp],
CDC [sp], and now to COR. We're very much looking forward to
working with the COR team as we progress towards building our
common goals.
So now let me turn the call over to Mark.
M. Levin: Thanks, Kevin, and congratulations on your promotion to chief
operating officer. Great job.
K. Starr: Thanks.
M. Levin: Before we take your questions, let me take a minute and put
the merger in perspective. This is a milestone in executing on
our ambitious business plan to build an integrated research
and development-rich commercial biopharmaceutical company. We
have a proven track record in structuring unique business
alliances, including mergers such as this, 50-50 partnerships
with big pharma, in-licensing of products and targets, and
access to novel drug discovery and development technologies.
Looking forward, the new commercial capabilities and hospital
sales force resulting from the COR merger will enable
Millennium to maximize our existing pipeline and expand even
further our in-licensing efforts.
Let me leave you with some of what we will accomplish over the
next 90 days alone. First, provide 341 preliminary phase II
data in multiple-myloma, presented at the ASH meeting next
week. Secondly, initiate the 6,000-patient advanced MI phase
III trial of Integrilin and facilitated angioplasty for ST
segment elevation MI. Thirdly, initiate additional phase I
combination trials of 341 and Taxateer [sp] in solid tumors.
Fourthly, initiate phase I trials of CT5-- I'm sorry,
CT535518, a first-in-class RTK inhibitor in acute myloid [sp]
leukemia. And continued phase [sp] of transforming
relationships, including mergers, acquisitions, in-licensing,
and partnerships.
So as you can see, we've got a lot of exciting news events
coming up in the next 90 days, which we'll certainly keep you
up to date on.
And finally, I'd like to say for all of us at Millennium what
an outstanding job Vaughn, Charles, and their team have done
in building one of the pre-eminent biotechnology companies and
how proud we are to be continuing this journey with them of
building the next biopharmaceutical company.
With that, we're now ready for questions. Operator?
Operator: Thank you. Ladies and gentlemen, if you would like to register
a question, please press the one, followed by the four on your
telephone. You will hear a three-toned prompt acknowledging
your request. If your question has been answered and you would
like to withdraw your polling request, please press the one,
followed by the three. If you are using a speakerphone, please
pick up your handset before entering your request.
One moment, please, for the first question. Mike King with
Robertson Stephens, please proceed with your question.
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M. Levin: Good morning, Mike.
Operator: Just one moment.
Mike King: Can you hear me? I'm not on mute.
M. Levin: Good morning, Mike.
M. King: I got cut off.
M. Levin: We can hear you.
M. King: I'm sorry about that; I'm fine. I think the person who's
probably the happiest in all of this is Vaughn's mom.
V. Kailiean: That's true; you're right. She doesn't know yet.
M. King: Oh, she doesn't?
V. Kailiean: No.
M. King: Shame on you, shame on you. My questions really are more of a
financial nature. I just-- Kevin, can you just discuss the
valuation premium for us, please, if you would, and what kind
of comparables you took into account when deciding on the
acquisition price. And I know that you're going to give
guidance on, you know, the model of the combined companies
going forward, but I thought if you could comment just in
general, about potential cost savings, as well as things like
the charges for in-process R&D and amortization. Thanks.
K. Starr: Sure. So first, question, Mike, was on the premium. We, as we
do in all of our cases when we look at mergers and
acquisitions and bringing people and pipelines together, look
at it through a number of different lenses, and the primary
lens we look at it is how it affects our ability to build the
company that we've articulated over the next five, 10, and 15
years, and to do that, we do discounted cash flow analysis of
the product pipeline on a probablized basis, and that
includes, of course, Integrilin in our anticipated sales
growth, for Integrilin, as we do see that market continue to
expand. I mentioned the 30-percent-plus growth, certainly in
the near term, and over a sustained period of time.
We also looked at some of the promising pre-clinical and
near-term clinical candidates, like the RTK program and factor
10A, looked at those through a probablized lens, as they will
come through the pipeline going forward. We also counted,
importantly, some of the synergies between what Millennium was
going to have to build to aggressively move into the
commercial arena for programs like 341 over the next several
years and what the synergies with the COR team could do to
help us build avoid-- some avoidance of build in some of those
areas. So we looked at discounted cash flow, we looked at
overall influences to how it could accelerate our pipeline. We
certainly looked at trading averages over the 30, 60, 90, and
longer period of time, and on all fronts, it came out to the
$35 number, which we offered to the COR shareholders, and the
board of directors, which was accepted last night. That did
result in a 77 percent spot premium and a 64 percent over the
recent trailing average. We felt that was solidly right in the
mark of fair value for both Millennium shareholders and for
COR shareholders and what we can do to build this company
together.
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In terms of guidance, I did mention we're not going to give
specific financial guidance until the end of January at our
annual call. I will say a couple of things about synergies. We
don't look at this merger in the classic major pharmaceutical
merger sense, where we look at hundreds of people or tens or
hundreds of millions of dollars of near-term savings, with
overlapping organizations. What we've actually found with the
two groups are very complementary organizations. We will have
a handful of overlapping functions, which we'll work through
during some transitional roles. The biggest synergies we see
and the biggest cost savings we see are build avoidance for
both companies. You know, we looked at COR as a stand-alone
enterprise and where they were going, to develop oncology
expertise, to actually, in their plans, to add some more
genomics capabilities and early stage discovery capabilities.
We can help them avoid that build from a stand-alone basis.
Likewise, I mentioned the commercial side, where we were
aggressively pursuing plans to get ready for 341 and its
potential over the next couple of years. This has a major
impact of how we look at that over the next several years. So,
we see some real synergies at how we would build the company
together that are much more efficient than we would have done
as a stand-alone.
M. Levin: Thanks, Mike.
Operator: Maykin Ho with Goldman, Sachs, please proceed with your
question.
Maykin Ho: Hi. I have a question mostly on the R&D program -- can you
expand a little bit on the synergy in the cardiovascular area?
I know you've been working on it at Millennium for quite a
while; obviously at COR it's the major focus. And then also
talk about the receptor [inaudible] kynase program.
M. Levin: Yet, Maykin, let me just give you a little bit of an overview,
and John and Vaughn should comment on this also. In general,
as you know, many, many years ago, seven years ago, actually,
Millennium started working in the cardiovascular area, and
it's always been a driving force. We have major programs in
arteriosclerosis, and also in congestive heart failure, and
those are programs with Buyer and Lilly, and we've built up an
extraordinary team inside, and so as we got talking to Vaughn
and Charles, we've always believed that we have to build a
cardiovascular franchise inside Millennium, based on the fact
that it dominates the franchise areas in the world today, with
over $40 billion in sales alone, in the cardiovascular area.
So as we look at the overall synergies, Integrilin can come to
market -- certainly Integrilin now in clinical trials to
actually add to its market share in other applications outside
the current approved applications. New molecules that COR [sp]
is developing in the platelet area, the thrombosis area, the
10A program, the ADP program, and also basic programs in
research and genomics behind this, which actually are
extraordinarily exciting, that Jamie Toppler [sp] and the team
at COR are working on.
The synergy between what they're doing there and our programs,
we believe, are very significant, not just in the
cardiovascular area -- as we all know, the overlap between
cardiovascular, obesity, and diabetes is very significant, and
we see some tremendous synergies, not only in cardiovascular,
but obesity and diabetes, for the long-term. Let me ask John
and Vaughn also to add to that.
John Maraganore: Well, I think, Mark, you said it -- you said it very nicely. I
think there clearly are underlying commonalities of both tapa
physiology [sp] as well as molecular mechanisms that go
between cardiovascular and also with inflammation and
metabolis disease. There
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are also market synergies as well, as we look at obesity and
diabetes, where, in fact, major morbidities associated with
those diseases include cardiovascular disease.
So there's clearly both market synergies, there are clearly
molecular synergies, and that's an important aspect of how
we've looked at this, going forward.
V. Kailiean: And let me -- this is Vaughn. Let me just sort of talk -- take
it from John and move it further downstream. Commercially,
there are tremendous synergies, as we have our hospitals sales
force positioning in all the tertiary care, major teaching
hospitals in the United States as well as the major -- as well
as some of the major community centers in the United States.
Since we're sitting there already with a number-one product
and a number-one reputation, as the oncology program of
Millennium rolls forward, the first and natural place for it
to go is on top of our hospital sales force, in their hands,
into those institutions, and then if you think beyond that,
our own program, our own RTK program, which I'm going to ask
Charles to comment on in just a second, then builds on the
back of the LDP 341 synergy and then finally, after that, our
own 10A program, comes in. So, it's a wonderful, rolling
synergy, all the way from science, all the way out to
commercialization.
For a little bit more detail on the RTK program, which you
asked about, Ken, I'd like to ask Charles to give you a little
bit of an update on that, and where we stand vis a vis our IND
and our first clinical applications.
C. Homcy: Yes, we're very much on time to enter the clinic in the first
quarter of next year, and this is a inhibitor of FLT III,
which is a growth factor receptor that's mutated in about 30
percent of patients, to a constitively [sp] active form.
Patients with AML. So this is very much like the story of
Gleveck, with the Abelson [sp] gene, that's mutated in that
disease. So, this comes out of our, originally, out of our PGF
receptor program, so this compound is an orally active, highly
bio-available, very potent inhibitor of FLT III, and so we're
very excited about the potential for that in AML. But from
that program, we have a very large chemistry now that will
provide additional leads for producing compounds for other
kinds of cancer, with other kinds of activities, in terms of
this sub-family of receptor tyrases and carnases [sp] likely
obastoma [sp] where there's a autocrin loop [sp] for PGF.
And we're very much excited -- one synergy that I don't think
has been talked about is the PDGF still plays -- plays a very
important role in inflammatory diseases, where it's a major
player in the healing process, in response to inflammation,
and in certain diseases like hypatic [sp] cirrhosis, other
fibroidic diseases involving long and progressive renal
disease. PDGF plays a very important role, and we now have
orally active, very selected, PDGF receptor inhibitors, so
we're excited about the idea of sort of funneling these into
the programs that already exist at Millennium in terms of
inflammation and cancer.
And then finally, I mean, I think that one aspect that Mark
touched on, that hasn't been emphasized, is that as a
cardiologist and a scientist, if you just look forward in how
you're going to treat any disease, and this is particular true
of cardiovascular diseases, they are going to be personalized
in the future. We are going to understand which pathway one
needs to inhibit for a particular patient at risk. I mean, in
a sense, the stethoscope of the 1900s will become the kind of
transcriptional profiling and hapa type profiling that
Millennium will lead the world in. So, we're all very excited
about building that capability into the treatment of
cardiovascular diseases and rolling that in, actually, into
patient care directly and quickly.
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M. Ho: Thank you. If I may follow-up with another question -- what is
in the agreement with Schering-Plough and COR and is there any
stand still for Schering-Plough, and will this merger affect
the relationship going forward?
M. Levin: The short answer is, no, it will not affect the relationship
going forward. We've had a wonderful relationship with our
partners at Schering-Plough. They were notified of this
transaction yesterday, after the board of directors approved
it. They congratulated us. Yes, there is a stand still, but
we're very good partners. We don't have to resort to a
contract.
M. Ho: Thank you. Congratulations.
M. Levin: Thanks a lot, Megan?
Operator: Bill Tanner with SG Cowen, please proceed with your question.
M. Levin: Hey, Bill.
Bill Tanner: Hey, how are you guys? Maybe for you, Kevin -- I don't know if
you mentioned this - is there a collar on the deal, and I
wonder if you could comment as to a break-up fee? And perhaps
to follow-on on the last question -- is there the potential,
then, to perhaps restructure any kind of a Integrilin-related
agreement with Schering?
K. Starr: There is no collar; this will be a fixed-exchange ratio deal
through closing. There is a break-up fee associated with the
transaction, and when we think about restructuring the
relationship with Schering, I just echo Vaughn's comments --
historically, we look at them as extremely strong partners and
look to continue that relationship the way we have in a very
strong way.
M. Levin: Thanks, Bill.
B. Tanner: OK. Could you comment as to the break-up fee, then?
K. Starr: So the break-up fee is $75 million, and it has the standard
clauses in it, related to material, adverse changes, and it is
very ordinary in the way it's been constructed.
B. Tanner: OK, thank you.
M. Levin: Thanks a lot, Bill.
Operator: Caroline Pratt with Needham, please proceed with your
question.
Caroline Pratt: Hi. Congratulations.
M. Levin: Hey, Carol, how are ya?
C. Pratt: Good, thanks. I have two questions -- one is, at what point
during the negotiations did you learn about the revised
Integrilin guidance that would be coming out? And the second
question is, what does this do to your previous goal of 12
products in the clinic by year-end? Thanks.
M. Levin: OK, Carol, the first -- you know, we started talking,
actually, with Vaughn and the team in September, and we've had
an ongoing discussion now, I guess, for about four months,
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Page 12
and one of the most important things to us on both sides of
this relationship has been, in all cases, coming forward and
saying, "What are the great opportunities," of course --
that's always easy -- but coming forward and talking about
what the issues are. So Vaughn and I and the team talked about
this a few weeks ago, we understood it, we have an
extraordinarily strong team inside, including John's expertise
in this field and others. We went out and we talked to major
academic leaders in the field across the country, across the
world, to really work with Vaughn and his team to better
understand what the numbers meant. And as we came through that
process, we continued to be convinced that this was a major
product for the future, continuing to grow at 30 percent. So
over the last few weeks, we heard about it, and we worked on
it, we understood it, and we see it as a pause and we would
expect significant growth next year.
To your second quarter, about 12 molecules in the clinic by
the end of the year -- that's going to be a stretch for us,
but let me tell you a little bit about where we are. A couple
things - one, we currently have nine molecules in the clinic.
We think it's going to be at least nine to ten by the end of
the year, and that doesn't include the IND that's going to be
filed within the next couple weeks. So between nine and ten
molecules in the clinic, one IND file, so you know, very close
to 11. One product on the market, which is certainly very
important, and then we're going to bring in probably some
late-stage pre-clinical molecules on top of that.
But I think also one of the things to do, which is important
here in this question, is to step back and look at
Millennium's major goals for the year. It was one to two
genomic targets in the clinic. That's done; we accomplished it
with obesity. Three-forty-one in Phase II; done.
Three-forty-one in combination trials in Phase I; done. Nine
seven-seven in Azmin [sp] Phase II; done. LDP02 in
ultra-cholitis and Crohn's in Phase II; done. Major metabolic
disease alliance; done. Revenue targets - we will hit. Cash
targets - we will hit. And in 12 molecules in the clinic -
we're going to get awful close, but we think we've done an
extraordinary job across all of those, and whether it's 11 or
12, we think at the end of the day, we've had really an
extraordinary year.
C. Pratt: Great, thanks. Congratulations again.
Operator: Meirav Chovav with CS First Boston, please proceed with your
question.
Dave Whiskey: Actually Dave Whiskey [sp] here. Hi, guys.
M. Levin: Hey, good morning.
D. Whiskey: Just to follow-up and major some more clarity on the previous
question -- given the slowdown in Integrilin sales this year,
what specific changes in the market next year do you see that
will allow you to obtain 30 percent growth, how long will this
growth continue, and what do you forecast for peak sales?
V. Kailiean: You know, there are two things you can do in this market to
get a product and category going again. One of the things that
has happened over the past three to six months is sort of a
retraction on the part of the two major competitors in terms
of market-building. That market-building has been left to us
and our partner, Schering-Plough. We are going to continue
that market-building through the Crusade effort. The Crusade
effort is really focused on ensuring adherence and adoption of
the ACCA/AHA guidelines at the emergency room level, where
these patients first present with chest pain. These guidelines
recommend the aggressive use of a 2B3N inhibitor in those
high-risk patients who are moving on to CAT. So we are going
to get that through at the hospital level.
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That ends up in a real benefit, because as you know, when
guidelines are adhered to, patient outcomes are significantly
better.
Second, in the area of just competitive, the other way to grow
a business, as you've grown the pie, is to get a better piece
of the pie, is we've got a very aggressive program in place,
targeting those institutions that can really get a significant
economic benefit at a time when coated stents are coming out,
at a time when brachio-therapy [sp] is being utilized, at a
time when new closure devices -- all of these things are
adding costs to an intervention for cardiologists and for
institutions. The one thing they can do to significantly
reduce their expenses in that category is just switch from
Reapro [sp] to Integrilin. It's a significant cost savings in
the drug area in those institutions, and we plan to bring that
message each of the institutions in the United States.
M. Ho: Vaughan, this is Maykin. Talking about that, what do you think
the impact of drug-coated stents will be the 2B3A category? So
you're expecting a switch from the more expensive Reapro to
the less-expensive Integrilin, but would they just decide to
eliminate the use of 2B3A? We've been hearing some rumblings
from some cardiologists in that regard?
V. Kailiean: Why don't we ask another cardiologist? Charlie, do you want to
talk to the issue of drug-coated stents?
C. Homcy: Yeah. I mean, I don't -- what I think I would say to that is
the fact -- people said that when stents first came out,
there'd be no systemic thrombotic events when the cardiologist
puts them in. In fact, the same problem applies to putting in
drug-coated stents. That is, that you deploy a drug-coated
stent, you induce thrombis, you induce myocardial infarctions
[sp] and the same kinds of problems occur. In fact, if
anything, the use of drug-coated stents will lead to
cardiologists tackling more difficult vessels, vessels that
they otherwise might not have tackled and doing multi-vessel
stenting. I mean, if you look at any of the clinical trials of
2B3A inhibitors, those are the kinds of patients, multi-stent,
multi-vessel, where myocardial infarctions in the procedure, a
pari-procedural [sp] period, occur at a much higher level, and
that's where the efficacy of 2B3A inhibitors really come out.
So in fact, I think that drug-coated stents will do two
things. More stents will be deployed in more vessels, more
difficult vessels will be deployed. In fact, I expect patients
who go to bypass surgery today in the future will go more
frequently to stenting, and I think 2B3A inhibitors will allow
that, will allow the cardiologist to put multiple stents in
comfortably, without the risk of creating myocardial
infarction. So I think actually the same story applies -- it
doesn't change.
M. Ho: OK, thank you.
M. Levin: Thanks, Maykin.
Operator: Dennis Harp with DB Alex Brown, please proceed with your
question.
Dennis Harp: Thank you and congratulations to both companies.
M. Levin: Thanks. Good morning.
D. Harp: -- you mentioned a number of programs to expand the
indications for Integrilin, and we've got a trial starting up
at STMI in the very near future. Could you give us some sense
of the timing of when those results might come in, and what
the incremental market -- target market size of those
additional indications might be? And then also,
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Page 14
could you just refresh our memory on the economic arrangement
with Schering-Plough in the U.S., Europe, and how that works
with Integrilin.
V. Kailiean: Sure. The clinical results won't be available for about 18
months or so, possibly longer, in the setting, which is
basically a facilitated angioplasty setting, assessing whether
early use of a combination of pastos [sp] TNK, full-dose
Integrilin as compared to just full-dose Integrilin in
patients, both groups of patients moving rapidly on to
intervention, compare those two approaches to an early,
aggressive therapy in ST segment elevation MI. So the results
won't be out for -- for a period of 18 to 24 months.
Importantly, what this does, and you can't just look at the
400,000 to 500,000 -- I can't remember the numbers off the top
of my head -- patients that this brings in. What this will
hopefully do for us is make the use of 2B3A inhibitors in
peric [sp] use in all acute coronary syndrome patients,
regardless of whether they have ST segment elevation in mind,
or ST segment depression, and that, then, changes the whole
marketplace, so that when a patient presents who's high-risk,
before they try and determine whether they have ST segment
elevation MI or not, the answer is aspirin, heperin, and
Integrilin, so that's the goal there.
As it relates to Schering-Plough, the collaboration is set up
right now for a 50-50 profit share in the United States. We
basically take all the sales, throw it into a bucket, subtract
out cost of goods, marketing expense, some medical expense,
and divide the resulting margin between the two companies.
Around the world, outside the United States, COR receives a
double-digit royalty on any sales generated by
Schering-Plough.
D. Harp: Great, thank you.
M. Levin: Thanks a lot.
V. Kailiean: Thanks, Dennis.
Operator: Todd Nelson with RBC Capital Markets, please proceed with your
question.
M. Levin: Good morning.
Operator: The line is open to Todd Nelson.
Todd Nelson: Excuse me, thanks. I apologize. Just a couple of questions --
I think most of them have been answered, but just to maybe
elaborate on a couple of things. I know that Mark, you had
talked about the synergies, and Vaughn also, and in combining
these two companies, maybe we could just talk a little bit
strategically about the feeding of the genomics-driven part of
the discovery pipeline into what presumably would be the
chemistry capabilities that COR has, and then Mark, given the
relationships, I think, that you mentioned you had with Buyer
[sp] and Lilly, over the course of the last few years, how
will you be restructuring those, if, indeed, you need to, and
then my second question is just very simply related to
manufacturing and Kevin had also mentioned some need not to
build things, and I wonder if that issue has been addressed
through this integration.
M. Levin: OK, let me start with Buyer and Lilly -- those relationships
continue for the next couple of years. [inaudible] they're
very strong relationships in the cardiovascular area, one in
congestive heart failure, and one in arteriosclerosis, but
then at the end of two years, you know, we certainly look to
integrate these efforts, certainly in a much more synergistic
way, but at the same time, we can share ideas and biology, and
in many cases, actually share information and targets across
all the programs. So the Buyer Lilly relationship will
continue and they are very strong.
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December 6, 2001 / 7:00 a.m. MT
Page 15
From an overall genomics effort, let me see if I can answer
your question -- Millennium, as you know, was originally built
on a genomics infrastructure. We've scanned the genome, we've
got several thousand druggable targets in front of us. We've
run those across a large transcription profiling effort,
looking for up and down regulation, tissue specificity across
the heart, across cancer tissues, et cetera, and much of the
same now has been done at COR in the genomics area, especially
in the whole cardiovascular area. So what this is going to
allow us to do is really combine this powerful genomics effort
with druggable targets and drive this into the chemistry area.
We're going to have over 300 people in drug discovery, from an
I2 put screening [sp] to lead optimization, and as Charles
mentioned, we see tremendous synergies in certain classes of
molecules. So for instance, the RTK kynase [sp] program from
COR, that kynase expertise is actually very important in
Millennium's kynase program, and a sub-segment of our genomics
program is to identify every kynase in the genome, to place it
either in cardiovascular disease or oncology or inflammation,
to find the right tissues, and then develop chemistry and
structural biology and computational chemistry around the
kynase area. So that's just one example of the synergies from
the genomics effort to chemistry and moving downstream into
structural and computational chemistry.
The third question, on the manufacturing side, could you be
more specific about the question there?
T. Nelson: Well, just in the sense that as you go forward and have more
products emerging, you had talked before about potentially,
you know, how you're going to address manufacturing issues and
just very simply, does COR has manufacturing capabilities?
V. Kailiean: No. This is Vaughn. COR does not have manufacturing
capabilities. We've long held the principle that our best
investment was in research, development, and
commercialization. We have not invested in the bricks and
mortar of manufacturing. Our Integrilin is made by two very
large chemical manufacturers; the bulk product is made in
Europe and it's filled and finished here in the United States,
on a contract basis. So while we bring the capability to the
virtual manufacturers, we do not bring bricks and mortar in
that respect.
T. Nelson: Thank you.
M. Levin: Thank you.
Operator: That's all the time we have for the question and answer
session. Ms. Brazier, please continue.
: Thank you. That concludes our conference call for today. If
you have additional questions, please feel free to call the
investor relations professional at either company. Thank you
for participating in today's call.
M. Levin: Thanks, everybody, and have a great day.
V. Kailiean: Thanks, everybody.
Operator: Ladies and gentlemen, that does conclude the conference for
today. Thank you for participating. ~